Blue Ocean Leadership

The best and most empirically supported strategy book I have ever read is Blue Ocean Strategy and the authors of the 2005 book, W. Chan Kim and Renee Mauborgne, just published a great article on the Harvard Business Review, “Blue Ocean Leadership.” The need for blue ocean leadership is highlighted by the statistics that only 30 percent of employees are actively committed to doing a good job, 50 percent just put their time in while 20 percent act out their discontent by negatively influencing co-workers, missing days on the job and driving customers away through poor service. Just step back and re-read that last sentence: 20 percent of all employees in the US act in counterproductive ways.

Poor leadership is the cause of this widespread employee disengagement, according to US polling agency Gallup. People do not intend to be poor leaders but they lack a clear understanding of what changes it would take to bring out the best in everyone and achieve high impact. The authors extend their research and theory from Blue Ocean Strategy, which essentially is a framework for turning non-customers into customers, and applies concepts and analytic underpinnings to help leaders release the blue ocean of unexploited talent and energy in the organization.

The key insight is that leadership should be considered a service that employees “buy” or “don’t buy.” Every leader has customers, the bosses the leader must deliver performance and the followers who need the leader’s guidance and support to achieve. When people value your leadership, they are effectively buying your leadership. They are inspired to excel. Conversely, when they do not buy your leadership, they disengage, becoming non-customers.

How Blue Ocean Leadership is different

Blue Ocean Leadership rapidly brings a step change in leadership strength. There are three overarching ways that is differs from traditional leadership:

Focus on acts and activities. Blue Ocean Leadership focuses on what acts and activities leaders need to undertake to boost their teams’ motivation and business results, not on who leaders need to be. It is much easier to change people’s acts and activities than their values, qualities or behavioral traits. Activities are something that any individual can change, given the right feedback and guidance.

Connect closely to market realities. Under Blue Ocean Leadership, the people who face market realities are asked for their direct input on how their leaders hold them back and what those leaders could do to help them best serve customers and key stakeholders. When people are engaged in defining the leadership practices that will enable them to thrive, those practices are connected to the market realities against which they need to perform, and they are then highly motivated to create the best possible profile for leaders and to make new solutions work. Their willing cooperation maximizes the acceptance of new profiles for leadership while minimizing implementation costs. Traditional leadership development programs tend to be quite generic and are often detached from what companies stand for in the eyes of customers and from the market results people are expected to achieve.

Distribute leadership across all management levels. Blue Ocean Leadership is designed to be applied across the three leadership levels: top, middle and frontline. It calls for profiles for leaders that are tailored to the very different tasks, degrees of power and environments that you find at each level. Extending leadership capabilities deep into the front line unleashes the latent talent and drive of a critical mass of employees, and creating strong distributed leadership significantly enhances performance across the organization. Conversely, most traditional leadership programs focus on executives and their potential for impact now and in the future.

Four steps of Blue Ocean Leadership

Kim and Mauborgne lay out four steps to Blue Ocean Leadership as follows:

1. See your leadership reality

Without a common understanding of where leadership stands and is falling short, you cannot make a forceful case for change. Many businesses discuss changes in leadership before resolving differences of opinion and perception over what leaders are actually doing.

The first step is to gain this understanding. To achieve this goal, the authors created an as-is Leadership Canvas, analytic visuals that show just how managers at each level invest their time and effort, as perceived by customers of their leadership. An organization begins the process by creating a canvas for each of its three management levels (top, middle and frontline).

You should select a team of 12–15 senior managers for this project. Choose leaders who cut across functions and are recognized internally as good leaders so that the team has credibility. Then break the team into three sub-teams, each focused on one level and charged with interviewing its relevant leadership customers—bosses and subordinates—while ensuring a representative number of each are included.

The goal is to uncover how people experience current leadership and to begin a company-wide conversation about what leaders do and should do at each level. The leaders’ customers are asked what activities, either good or bad, spend most of their time on and which are key to motivation and performance but are currently neglected. Crucial to the success of this phase is learning the specifics; the as-is Leadership Canvas needs to be grounded in acts and activities that reflect each level’s specific market reality and performance goals.

Kim and Mauborgne comment that the results of as-is Leadership Canvas are often eye-opening. In their research, they often find 20-40 percent of the acts and activities of leaders at all three levels provide only questionable value to those above and below them. They also found that it is common leaders to be underinvesting in acts and activities that 20-40 percent cite as important.

2. Develop alternative Leadership Profiles

The second step is to explore what effective leadership profiles look like at each level. The sub-teams then go back to their interviewees with two sets of questions.

The first set of questions the sub-teams ask try to pinpoint the extent each act and activity on the canvas is either a cold spot (absorbing leaders’ time but adding little/no value) or a hot spot (energizing employees and inspiring them to apply their talents, but currently underinvested or not addressed at all).

The second set of questions prompts interviewees to think beyond the bounds of the company and focus on effective leadership acts that they have observed outside of the organizations, particularly those they believe would have a strong impact if implemented in your organization. This is the phase where new ideas emerge about what leaders can be doing but are not. The ideas may come from a teacher, coach, grandparent, scout master, former boss, general, etc. During this step, you must get interviewees to detail the acts and activities that would add real value to them if undertaken by their current leaders.

The authors have developed a grid, similar to the one they built for Blue Ocean strategy, to process these finding:

Start with the cold-spot activities and acts, which go into the Eliminate or Reduce quadrants depending on how negatively interviewees judge them. You will immediately see the benefits of stopping leaders from doing things that add little or no value. Cutting back on these activities also gives leaders the bandwidth to add activities that improve their performance.

From the cold-spots then move to hot spots, which go into the Raise quadrant if they involve current acts and activities or Create for those not currently done by leaders.

Based on this input, the sub-teams should draft 2-4 “to-be” Leadership Canvases (as opposed to as-is canvases). These analytic visuals illustrate Leadership Profiles that can lift individual and organizational performance and provide a powerful contrast to the as-is canvases. The sub-teams crate a range of leadership models, not just one, to thoroughly explore new leadership space.

3. Select to-be Leadership Profiles

Once the sub-teams are comfortable with the to-be Leadership Canvases, they are presented to the entire management team (from board members to front line managers). This event (when the canvases are presented) starts with members of the original senior team presenting the three as-is canvases (one for each level of management). Using these canvases, the teams shows why change is needed, confirms that comments from all levels were considered and sets the context against which the to-be Leadership Profile can be understood and appreciated. Only discuss the profiles at the aggregate level so individual leaders remain open to change and feel everyone is in a similar situation.

Once the current situation is assessed, sub-teams then present the to-be profiles. Attendees then vote on the canvas they find most compelling. Senior leaders then discuss with everyone why they voted as they did. The top managers then meet privately — with the information on the current state, preferred to-be state and comments — and decide which to-be Leadership Profile to move forward on each level. They then return and explain their decisions to the team.

4. Institutionalize new leadership practices

The fourth and final step is to put the new to-be Leadership Profiles into practice. First, original sub-team members communicate the results to the people that they interviewed. Second, the company then distributes the agreed-on to-be profiles to the leaders at each level. Third, the sub-team members hold meetings with leaders to walk them through their canvases, explaining what should be eliminated, reduced, raised and created. Since every leaders is the buyer of another level of leadership, all managers will be working to change, knowing their bosses are doing the same thing on the basis of input they provided.

The leaders then pass the message to their direct reports and explain how the new Leadership Profiles will allow them to be more effective. To keep the new profiles top of mind, the to-be canvases should be posted in the offices of both leaders and their reports. Leaders also need to hold regular, at least monthly, meetings where they meet with their direct reports and elicit honest feedback on how they are making the transition to the new profiles.

Execution

One of the key strengths of the Blue Ocean Leadership plan is that it builds execution into all four steps. Realistically, any change initiative will be met with much skepticism, “here we go again,” either publicly or behind the scenes. Blue Ocean Leadership is different as its four steps are founded on the principles of fair process: engagement, explanation and expectation clarity. The application of fair process generates buy-in and ownership of the to-be Leadership Profiles and builds trust, setting the foundation for implementation. The most important practices in implementing a fair process are:

Respected senior managers spearhead the process. Senior managers need to conduct interviews and draw up the canvases, not just be on the list of those involved. This involvement strongly signals the importance of the initiative, which makes people at all levels feel respected and gives senior managers a visceral sense of what actions are needed to created a significant change in leadership performance.

People are engaged in defining what leaders should do. With employees input shaping the to-be profiles, people have confidence in the changes made. The process also helps connect them with their leaders, as they have greater ownership of what their leaders are doing.

People at all levels have a say in the final decision. Though the top leaders have final say on the to-be profiles, a slice of the organization across all three management levels gets to vote in selecting the new Leadership Profiles.

It is easy to assess whether expectations are being met. Clarity about what needs to change to move from the as-is to the to-be Leadership Profiles makes it easy to monitor progress. The monthly review meetings help the company check whether it is making headway.

As the authors point out, “the gift that fair process confers is trust and, hence, voluntary cooperation, a quality vital to the leader-follower relationship.”

Using Blue Ocean Leadership to be great

For those who are students and fans of Blue Ocean Strategy, as I am, the concept and process that Kim and Maubergne lay out for Blue Ocean Leadership is incredibly compelling. What is beautiful is the process is very detailed and thus easy to implement. Moreover, the underlying logic is clear and it is easy to see how following Blue Ocean Leadership can help you and your company be much more effective.

Key takeaways

Leadership is broken.Currently, only 30 percent (less than 1/3) of employees are committed to doing a good job. Although sobering, this statistic shows a huge opportunity for improvement.

Replicate the Blue Ocean grid. The best way to improve leadership is to extend the Eliminate-Reduce-Raise-Create grid that has proven successful in creating strategy to improving your company’s leadership.

Blue Ocean Leadership incorporates a fair process, necessary for success. The steps for Blue Ocean Leadership ensure a fair process (one that includes engagement, explanation and expectation clarity) that leads to buy-in and ownership throughout your organization.

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Author: Lloyd Melnick

I am EVP Casino at VGW, where I lead the Chumba Casino team. Previously, I was Director of StarsPlay, the social gaming vertical for the Stars Group (PokerStars, Sky Betting & Gaming, BetEasy, Full Tilt and BetStars). I was also Sr Dir at Zynga's social casino (including Hit It Rich! slots, Zynga Poker and our mobile games), where I led VIP CRM efforts and arranged licensing deals. I have been a central part of the senior management team (CCO, GM and CGO) at three exits (Merscom/Playdom, Playdom/Disney and Spooky Cool/Zynga) worth over $700 million.
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Lloyd Melnick

This is Lloyd Melnick’s personal blog. I am EVP Casino at VGW, where I lead the Chumba Casino team. I am a serial builder of businesses (senior leadership on three exits worth over $700 million), successful in big (Disney, Stars Group, Zynga) and small companies (Merscom, Spooky Cool Labs) with over 20 years experience in the gaming and casino space.